D Magazine ⋅ April 1996

THE NAKED EMPIRE The Clubs: WHY DALLAS IS THE CAPITAL CITY OF SEX

The upscale topless bar was born in Dallas, where club owners have taken the skin game to ever more opulent heights.

By JIM HENDERSONFrom D Magazine April 1996

It’s still a few days before the official opening, but it isn’t hard to visualize what the place will look like. A motorized scaffold creeps along the interior walls leaving a trail of mounted heads of buffalo, elk deer, and antelope 12 feet above the sunken floor, carpeted in leopard-skin patterns. Craftsmen from Oregon are positioning a 2-inch-thick slab of wooden door on its hinges. Beyond the entryway, under a sturdy awning of hand-hewn oak and cedar, Hispanic masons are wrapping a pillar in limestone trucked in from the Hill Country.
All around him, workers are scrambling to meet the deadline and Nick Rizos is trying to explain his latest flesh palace, named, for obvious reasons, The Lodge,
"What’s your impression when you walk into The Men’s Club or Cabaret Royale?" Rizos asks rhetorically. "You think; This is going to cost me a lot of money. I wanted a place that looked more like fun than expensive."
Rizos is no neophyte at this. For 13 years he has owned Caligula XXI on Northwest Highway, where he has milked the topless business for enough cash to open what may be the most elaborate skin bar to hit town so far. At Caligula he created a mirage of celebrity by putting on stage a string of ex-Playmates, minor-league models, and porn stars. Nick knows a gimmick, But is anyone going to think this place is cheap? There’s a fireplace 8 feet wide, a Plexiglas runway and dance platform jutting out from a mountain of porous rock, and a waterfall and a lacquered bar cut from the center of a very large fir tree. Behind the main room is a darkly paneled, library-esque cigar room and billiard hall and a kitchen that Rizos promises will turn out four-star cuisine.
Inexpensive fun? Rizos is playing to the illusion, but make no mistake: A night in this rustic mountain theme park, just off West Northwest Highway behind Sam’s Wholesale Club and the Mercado Juarez restaurant, will be as expensive as at any of Dallas’ other high-dollar boob bars. In fact, Rizos is actually raising the ante in the increasingly competitive business of melding sexual fantasy with country-club elegance.
By all accounts, the upscale topless joint was invented in Dallas 15 years ago. The Lodge-and The Men’s Club before it, and Cabaret Royale before it, and the Million Dollar Saloon before any of them- have taken the flesh business to new entrepreneurial heights and are reaping profits to drool over and lust after. The Convention and Visitors Bureau may not brag about it, but these clubs are a boon to the local economy, drawing in eager visitors from all over the country and the world.
In 1981, when Don Furrh opened the Million Dollar Saloon on Greenville Avenue-the first upscale topless club in Dallas and, perhaps, the first of its kind in the country-he announced that the place was named for its price tag. That seemed a staggering investment in a business previously thought to cater to the shallow-pocketed masses of bored husbands, blue-collar rowdies, perverts, college boys, and 5 dirty old men. Could that market pay for the pink palace that didn’t = even look like a topless joint? Valet parking at a strip bar? A VIP S room? Lights and sound to rival a Stones concert? Hey, this is a place > where guys go to look at naked women.
But Furrh had found the pulse and hit a vein. The suits and gold chains showed up in droves, and instead of holding old pick-ups and Chevettes, the parking lot on most nights was curb-to-curb yupmo-biles. Dancers were pocketing-G-stringing, actually-as much as $10,000 a month in tips. The but-toned-down boys in the glass caverns from Commerce Street to Las Colinas, the rich young professional athletes, the conventioning professionals, and corporate executives had found a playground and the sexually oriented business (SOB, as it is known in licensing circles) would never be the same. Were Don Furrh alive today, he might be a little astonished at the world he helped create. A million bucks would barely cover the wall hangings in the "gentlemen’s clubs" being built today.

SEVEN YEARS AFTER THE MILLION DOLLAR SALOON’S DEBUT, a Houston oil millionaire named Salah Izzedin and his partners plunked down $8 million to open Cabaret Royale at the end of a strip of restaurants on Composite Drive near the Walnut Hill exit from I-35E. Cabaret Royale didn’t just have a VIP room, it had an entire second floor for members only. It also had a gourmet restaurant, a fully equipped gymnasium for the dancers, and a business center-conference room with telephones and fax and copy machines-for customers. Three years later, The Men’s Club, discreetly unmarked by neon and resembling a state department installation more than a skin joint (but probably costing more than Cabaret Royale), rose out of the ground on Northwest Highway at I-35E and added a few new wrinkles, such as a swimming pool (yes, you can swim with naked women, weather permitting) and a boutique. Now The Lodge, built at a cost Rizos would not disclose, weighs in with a whole new fantasy.
" It’s a good business," says Rudy Perez, a manager at Cabaret Royale. "You mix alcohol and women and you can’t go wrong."
Thanks for the reminder, Rudy. Standing by the walls of books in The Lodge’s VIP room or strolling through the towering Spanish doors of Cabaret Royale or settling into a stuffed, high-back chair with a plate of lobster and pasta at The Men’s Club, it’s possible to forget the core businesses: booze and skin.
And there is a fine irony to the proliferation of topless bars in Dallas (there are 11 topless clubs and 17 class-A dance halls, where the dancers wear transparent, latex pasties over their nipples to comply with a peculiar city ordinance). Club owners, some of whom have establishments in other cities and other states, say the official attitude in Dallas is more hostile than anywhere, yet the clubs prosper here like nowhere else.
Each month the state comptroller tabulates mixed-beverage taxes collected from every licensed tavern, restaurant, hotel, caterer, and concession in the state and prints oui a list of the top 50 booze dispensers. Consistently, five or six of those top-grossing establishments are topless clubs in Dallas.
Last year, the comptroller collected roughly $2.5 million in beverage taxes-representing liquor sales of $ 18 million-from the six most popular Dallas clubs. In most cases, owners say, liquor accounts for only about 40 percent of the take. The rest comes from cover charges, meals, memberships, and assorted other items. The Men’s Club paid $499,551 in tax on liquor sales of $3,568,231. By that calculation, The Men s Club would have taken in just under $10 million last year. The top-grossing local club, Baby Dolls, paid $620,797 on sales of $4,434,264 in booze. That means the club did something more than $11 million in business in 1995.
In retailing, the markup on merchandise tends to have some relationship to the turnover time. The markup on a sofa is large, but a sofa may sit in the showroom for six months before it is moved. The markup on a loaf of bread is small, but a large grocery store moves hundreds or thousands of loaves a day. Saloons generally-and topless clubs especially-get the best of both scenarios: big markup, fast turnover. Usher’s Green Stripe, a common bar scotch, costs a club about $ 10 a liter from a liquor wholesaler. From that, a bartender can pour 33 one-ounce drinks that go for $5.50 each.
Turning a $10 bottle into a $181 bottle-a 1,800 percent markup -is an impressive feat, and on a good night it takes only a few minutes to do.
"We had one guy come in one night and order 10 bottles of Dom Perignon," says Rudy Perez of Cabaret Royale. "Thatstuffis$220a bottle. "
Yes, brothers and sisters, this is the state of our evolution. After 30 years of feminism, 20 years of consciousness raising, a decade or more of political correctness, and a numbing onslaught of talk-TV boy-girl psychobabble, the essential nature of our cultural universe is still, as always, held together by the sinew of sexual titillation. Boys still hanker to look at naked girls but now they don’t have to sneak down side streets to do it.
"The topless industry has become the night life," says Bjorn Heyerdahl, chairman of the Million Dollar Saloon Corporation. "We have a nucleus of conventioneers (among the club’s clientele). Businessmen are comfortable in these places. "

TOPLESS PUBLIC DANCING, SPUN OUT OF THE SEXUAL REV-olution of the ’60s, was not the most respectable of businesses when Don Furrh began putting together a string of clubs in 1968. Clubs in those days, scattered along strips such as Harry Hines and Industrial Boulevard, tended to be small and seedy and more likely to smell of urine and mildew than cedar wood and prime rib. Within nine years, Furrh owned 18 topless clubs and had a lock on the business in Dallas.
But, by the late 70s, Furrh told D Magazine several years ago, he was weary of the constant skirmishes with the vice squad and confrontations with politicians eager to revoke his licenses. His marriage to his high school sweetheart, Nina, also was disintegrating in part because she did not share his enthusiasm for the topless business. "I wanted to get out," he said.
So Furrh sold all of his clubs. But after a three-year hiatus, during which he and Nina became estranged but not divorced, he was back with the Million Dollar Saloon, which quickly became the highest-grossing topless bar in town.
The success of the MDS was widely heralded and duly noted, especially in Houston, where Salah Izzedin, head of Oceanic Oil Corporation and a member of a Lebanese-American family that controlled corporations on four continents, smelled opportunity. With a group of partners operating through a complex bundle of corporate entities, he opened Rick s Cabaret in Houston in 1983 and the cash flowed like a flooded bayou. Izzedin had visions of a sex empire that would rival the heyday of Playboy. Cabaret Royale in Dallas was the next stop on his avowed goal of a club in every major city in the United States.
It seemed that the Dallas topless wars had started with a bang. Literally. In the week that Cabaret Royale opened, Don Furrh was found shot to death in his home. There was never any evidence that the two events were related and Furrh’s death remains a mystery today. But the street talk and private suspicions did not exactly elevate the image of the topless business.
Nevertheless, Cabaret Royale scored big, just at the time Nina Furrh was taking over her late husband s business. She had never been enamored of topless bars and had no experience running one. She could have sold out and walked away rich, but she stayed and got richer.
"I felt confident because of the employees," she says, sitting in a conference room of her corporate headquarters in a modest, bland brick building across the parking lot from the Million Dollar Saloon. "We’ve got some employees, dancers and managers, who have been here for 13 years."
Too, she found, the business was in remarkably good shape and worth holding onto. Besides the club on Greenville Avenue and a spinoff-Million Dollar Saloon II on Northwest Highway-Don Furrh’s estate included the corporate office building and four other topless clubs, which were leased to other operators.
Competition from Cabaret Royale ate into MDS’s profits and Nina Furrh retrenched a little, closing MDS II and concentrating on the original location, getting her company free of debt and accumulating capital. A few years ago, she teamed up with Bjorn Heyerdahl, an entrepreneur who also recognized the topless business as just that, a business.
"It has a lot of advantages over other businesses," Heyerdahl says. "It is a cash business with a good cash flow...and no bad debts. You have no accounts to maintain. And it is really an infant industry, only 20 or 25 years old.
Over the past few years, MDS has dropped out of the pack leaders in gross liquor sales, but the club remains highly profitable. Late last January, with the help of the Halter Financial Group of Dallas and a West Coast brokerage house, Furrh and Heyerdahl took the company public. With S3.3 million in assets, a net worth of $2.7 million, and clear title to all of the company’s real estate, Million Dollar Saloon Corporation waltzed onto the NASDAQ bulletin board through a "reverse" merger with Goodheart Ventures Inc., a public, but inactive, Las Vegas corporation. (Reverse mergers, which cut the paperwork and the waiting period, are a common strategy for going public. Texas Instruments used it, as did Tandy, Blockbuster, and Turner Broadcasting.)
Four months earlier. Rick’s Cabaret in Houston had gone public to raise $4.5 million for expansion, but Heyerdahl and Furrh had other reasons. "We did it to establish the real value [of the company]. We are prepared to expand, but we already have the assets and the revenue to do it," Heyerdahl says. "We will explore other ingredients of entertainment-casinos, theaters, productions-and not just in Texas. We will not build new enterprises; we will acquire existing ones. "
Five million shares of MDS stock are outstanding, but only 5 percent will be traded through the NASDAQ bulletin board, which is one tier below a full, over-the-counter listing. On the first day of trading, MDS stock closed at $3.63 a share, setting the company’s value-tor that day, at least-at $18.1 million.
And what became of Izzedin and his plans for a Hefnerian juggernaut?
"He is in deep hiding," says Robert Watters, Izzedin’s former partner who now runs Ricks Cabaret. Well, he may not exactly be in hiding, but he has no residential telephone listing in Houston and the phones at Oceanic Oil Corporation have been disconnected.
With Cabaret Royale, Izzedin showed a flair that brought new dimensions to the skin industry. For al! its double-breasted, wing-tips-and-Rolex breeding, the Million Dollar Saloon still looked pretty much like a bar. Izzedin’s place was different. Visiting it was more like checking into a resort. He didn’t just have cooks, he had professionally trained chefs. Instead of floor managers and bookkeepers, he had hotel administrators and accountants. He had press agents, advertising agents, lawyers, a marketing department, and big plans. He recruited the best dancers he could find and planned theatrical productions, not just dance routines.
Izzedin knew how to throw a party and how to promote it, but could he run the business? For a while he soared, but like the mythical Icarus, he eventually got a little too close to the sun. His wings, in fact, had begun to melt even before he arrived in Dallas. Izzedin had departed Rick’s Cabaret in a blaze or bankruptcies, lawsuits, and tawdry accusations between him and his Houston partners. They accused him of embezzlement, immoral behavior with the club’s young dancers, and encouraging narcotics and prostitution at the club. Izzedin admitted stealing money from Rick’s and not reporting it on his tax return, but, as a weapon against his partners, he threatened to go to the 1RS and report them for doing the same.
Against that backdrop, Izzedin opened Cabaret Royale. Movie stars, millionaire jocks, and executives lapped it up. It was not unusual, employees say, for a high-roller to drop $25,000 in a single night of eating, drinking, and rubbing, uh, elbows with beautiful women. Robin Leach visited and filmed a segment on Izzedin for his "Lifestyles of the Rich and Famous" television series.
Izzedin continued charting his march around the world, but while he was making deals in Mexico City and New York-he turned the old Studio 54 into another topless dub-his schemes were beginning to unravel. He was hit with age discrimination suits by a group of 40ish dancers and waitresses, who sought $2.5 million for being fired or being refused dancing jobs because they were deemed "too old." Bank One raided Izzedin s bank account after he defaulted on a $357,000 loan in Houston.
About the same time, the Department of Labor filed a lawsuit seeking $ 11 million in back wages for women who had been paying for the privilege of dancing at Cabaret Royale. Izzedin’s position was that the dancers were private contractors who earned their own money from the customers; he merely provided the venue-sort of like a muffin vendor renting space in a mail.
Not so, said the DOL. Dancers are employees and muse be paid minimum wage. U.S. District Judge Joe Fish agreed with the government and last year, Izzedin and the DOL settled for $1 million, but the government has yet to collect.
As he had done at Rick’s Cabaret in Houston, Izzedin used a number of corporate entities to manage the Dallas club. As the debts and the lawsuits piled up, he placed some of those entities into bankruptcy, temporarily closed Cabaret Royale, and left town. At the first of this year, a new corporation-The Ritz Royale-took the club over. It’s now run by Jack Gillis, an attorney who also has degrees in management and economics.
"This is a big business and it has to be run like a big business," Gillis says. "One theory is that Salah was pulling the best management talent out of here to open the club in New York. "
Izzedin left no small mark on the Dallas skin industry. He ratcheted up the standard for upscale clubs, introduced new elements of entertainment, and, with the DOL lawsuit, changed how other clubs operate-or are supposed to operate. All are now required to pay dancers the minimum wage ($4.25 an hour) as a draw against tips. At most clubs, the dancers turn in their tips each night; the company withholds federal taxes, deducts the draw, and remits the balance in the form of a regular payroll check.
"We haven’t checked all of them to be sure they are complying." says Curtis Poer of the DOL’s wage and hour division, "but we will get around to that."
LOOKS LIKE THINGS COULDN’T BE BETTER FOR THE TOPLESS BIZ, eh? Look again. While the posh joints at the top of the pecking order are propagating and slugging it out for supremacy, many of those a few rungs down the status ladder are bogged down in a long-running legal fight for survival. Since 1986, when the Dallas City Council passed what it termed the "most comprehensive regulation of sexually oriented businesses in the nation," local government has been trying, mostly unsuccessfully, to thin out the ranks of topless bars. Essentially, that ordinance prohibited topless clubs from operating within 1,000 feet of a home, school, church, hospital, park, historic area, or another sexually oriented business. Clubs in violation of that provision were given three years to relocate.
The problem was that for most of them, there was no place to go (try to find any place in Dallas that is more than three blocks from one of the above) and some had made long-term commitments to their present locations.
"We had just signed a 20-year lease," says Scott Burch, who, with his brother, Duncan, operates Baby Dolls Saloon on the Bachman Lake strip of Northwest Highway. The Burches also run The Fare and Déjà Vu in that same neighborhood, as well as four other clubs in Dallas and Fort Worth.
Their clubs, which cater more to a blue-collar, working-class clientele, are among the biggest moneymakers in the topless business. Last year, Baby Dolls sold $4.4 million worth of booze-nearly $1 million more than The Men’s Club. For the past three years, it has consistently ranked in the top five alcohol outlets. The Fare and the Fort Worth Baby Dolls always rank among the state’s top 50.
Considering the stakes and the resources of the club owners to finance a protracted war, it was predictable that the restrictive city ordinance would be ushered directly into court, where it has been ever since and may be for a long time to come.
The courts upheld the location restrictions, but the club owners quickly wired around them. They attired dancers in latex pasties, so they were not legally topless, and bottoms that added a few strands of thread to the basic bikini. In 1993, the city tried to force the dancers to wear bikini tops instead of pasties, but that law was ruled unconstitutional.
To justify regulating topless clubs, cities have to show that they have "deleterious secondary effects" on the community, such as crime, lowered property values, or retarded development. In striking down the bikini-top ordinance, judge Robert Maloney said the city had produced no evidence that "a requirement that dancers wear bikini tops instead of pasties will reduce deleterious secondary effects."
Besides, proving deleterious effects under any circumstances has not been easy. The neighborhood around Bachman Lake, ’ where seven SOBs and simulated topless dance halls are located, has suffered economically in the past 20 years, but it is not clear that the decline has been a result of the skin bars
A city study a couple of years ago found that while the Bachman Lake area had just 5 percent more crime than the city average, it had three times as many sex crimes. Pinning those statistics on topless clubs however, is not easy. Even the vice cops who police them say crime in the clubs and on their parking lots is not an acute problem.
Of the 159 charges filed against 18 club; last year, according to vice records, only five were for prostitution. The others mostly were for public lewdness (generally, dancers allowing customers to touch them) or liquor violations (usually, soliciting drinks).
"There are relatively few problems," says Capt. Eddie Walt, "They are run pretty well and we keep a close eye on them."
Many of the clubs-Baby Dolls is one-prohibit dancers from leaving with customers and some randomly test employees for drugs. Scott Burch, whose six clubs have 1,100 to 1,300 employees at a given time, says "only about 4 percent test positive." First-timers, he says, are put in rehab. Repeat offenders are fired.
Roxann Staff, a director of the American Bank in the Bachman Lake neighborhood and president of the Bacbman-Northwest Highway Community Association, agrees that the problem is not within the clubs, but outside them, in the negative neighborhood environment they create.
"If a vacancy occurs," she says, "Baskin-Robbins doesn’t want to move in next door to a topless club. It limits your market." Instead, she says, the space goes to pawn shops, check-cashing operations, liquor stores, "lingerie" shops, nightclubs, and the like. Too, she says, prostitutes tend to work the streets in the vicinity of topless clubs. " When guys leave those places, they are looking for something besides a drink," she says.
Still, Staff acknowledges that many of the neighborhood’s problems began when D/FW Airport opened and the exodus of airline workers and travel related businesses that had depended on Love Field sent property values into a tailspin. Lower-income families and individuals rushed into the vacuum.
That is not to say that the Bachman Lake area is forsaken. Late last year, Brinker International closed its Chili’s restaurant on Composite Drive near Walnut Hill (just around the corner from the upscale Cabaret Royale) and moved to...you got it, Bachman Lake. Says Brinker spokesman Harry Day: "The topless clubs in that area didn’t play a part at all in our decision."
For now, though, the social and economic issues are largely moot. The courts, ultimately, will decide the fate of the Bachman Lake area. The city is appealing the bikini-top ruling and club owners are mindful that their time may be limited. That was a major factor in Nick Rizos’ decision to open The Lodge in a safe zone a couple of miles west of the lake, and it’s the reason other owners are scouting locations elsewhere-including other cities.
The Bachman Lake club owners tried to reach a settlement with the city last year. In exchange for being allowed to continue their current operations, they would remove offensive signs and hide their businesses behind fences and landscaping. At first it appeared that the city council was amenable, but a political controversy involving contributions by club owners to Councilman Chris Luna, who sponsored a settlement resolution, soured the deal and the council chose to remain in court.
"If I were just starting out in this business," says Nina Furrh of the Million Dollar Saloon, "I wouldn’t start out in Dallas. Dallas fights harder (against topless clubs) than any city I know of."
Curious. Dallas also supports topless clubs more enthusiastically than any other city. If you want proof, check the price of the Million Dollar Saloon on the stock market.